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State Attorney Generals Brace for Battle with Department of Labor Over Newly Proposed Federal Overtime Salary Exemption Threshold

After the March 7, 2019 unveiling by the U.S. Department of Labor (“DOL”) of its long- awaited proposed rule, which would make more workers eligible for statutory overtime pay, the attorneys general (“AGs”) of 14 states and the District of Columbia announced on May 21, 2019 that they oppose DOL’s proposed rulemaking. Included among the states opposing DOL’s proposal are New Jersey and New York.

The existing annual salary overtime exemption threshold under the Fair Labor Standards Act (“FLSA”) is $23,600 for full-timers (or $455 per week). Employees who are paid below that salary must be paid overtime if they work more than 40 hours per week. The FLSA salary threshold test has not changed since 2004.

DOL’s newly proposed rule, characterized as an Executive Order 13771 “deregulatory action,” would, among other things, increase the qualifying salary threshold for overtime exemption to $35,308 annually for full-time workers (or $679 per week). In doing so, the rule, if promulgated, would effectively convert an estimated one million workers to hourly wage status and qualify them for time-and-one-half overtime pay for hours they work in excess of 40 in a given workweek.

The newly proposed rule also would clarify the type of compensation (such as payments made for vacations, holidays, illness, or failures to provide sufficient work) which would be excluded from the definition of an employee’s “regular rate” for purposes of calculating whether overtime pay is due, and increase the total annual compensation threshold for “highly compensated employees” (for whom overtime wages generally need not be paid) from $100,000 to $147,414 annually.

The proposed new rule stands in sharp contrast to the final rule promulgated by DOL during the Obama Administration in 2016, which would have raised the annual salary exemption threshold to $47,476 for full-timers (or $913 per week) and require automatic adjustments to the salary threshold standard every three (3) years. However, on November 22, 2016, a federal district court in Texas held that that rule was inconsistent with Congressional intent and issued a nationwide injunction staying its implementation. On October 30, 2017, DOL appealed the district court’s summary judgment decision to the Fifth Circuit Court of Appeals. On November 6, 2017, the appellate court granted the Government’s motion to hold the appeal in abeyance while DOL reexamined the salary threshold test.

The AGs argue that the proposed rule does not go far enough, championing instead the Obama-era 2016 Final Rule, which would have made roughly four million workers newly eligible for overtime pay. In the May 21, 2019 letter signed by each of the AGs, they contend, among other arguments, that the newly proposed rule would be arbitrary and capricious, and therefore unlawful under the federal Administrative Procedure Act, because it would unreasonably institute a markedly lower salary threshold level and improperly eliminate mandated periodic reviews of the salary threshold standard. Meanwhile, Congressional Democrats have announced plans to introduce legislation that would revive the Obama-era salary exemption threshold.

On March 29, 2019, DOL published its newly proposed rule, triggering a 60-day public comment period that expired May 28, 2019. Presumably, DOL will be reviewing the comments it received and publishing its final rule, though the final rule’s promulgation date is uncertain. Given the anticipated political and judicial battles over what the new threshold should be, it is not clear what overtime salary exemption threshold ultimately will emerge.

Takeaways for Employers

Employers should closely monitor administrative, judicial and legislative developments relating to the proposed increase in the salary exemption overtime threshold.
An increase in the threshold is likely, though the amount of the increase and the effective date of same remain uncertain.
Once the threshold is increased, certain employees previously exempt from overtime will be eligible for hourly overtime pay depending on what dollar amount is established as the new salary threshold standard, and employers will be required to maintain time worked records for those newly converted hourly employees.
In anticipation of the change in the threshold amount, employers should begin the process of identifying job classifications that potentially may be impacted by a change in the salary exemption standard.

This post was written by Clifford D. Dawkins, Jr. and David I. Rosen of Sills Cummins & Gross P.C.

Read more news on the DOL Overtime Regulations on the National Law Review’s Employment Law Page.

Three Takeaways from DOL’s Proposed New Overtime Rule

On Mar. 7, 2019, the U.S. Department of Labor (DOL) issued a Notice of Proposed Rulemaking (NPRM) regarding changes to the “white collar” overtime exemptions under the Fair Labor Standards Act (FLSA).

Here are three key points employers need to know:

1. The salary basis threshold would increase to $679 per week ($35,308 per year).

The DOL set this threshold by using the same methodology from the 2004 revisions, which set the salary level at $455 per week.

In 2004, $455 per week represented the 20th percentile of earnings for full-time salaried workers in the lowest-wage census region and in the retail sector. The new annual salary of $35,308 represents the DOL’s estimate for the 20th percentile standard in January 2020, when it anticipates the rule to become final. The NPRM would also permit employers to count nondiscretionary bonuses and incentive payments (including commissions) paid on an annual or more-frequent basis to satisfy up to 10 percent of the standard salary level.

With the prior rule issued under President Barack Obama, the DOL attempted to change the salary basis level from $455 to $913 per week. As we have covered in this blog, the change did not take effect because the United States District Court for the Eastern District of Texas blocked the rule from taking effect. Under President Donald Trump, the DOL ultimately stopped pursuing the rule and dropped its appeal of the Texas court’s ruling.

2. The salary basis threshold for highly compensated employees would also increase from $100,000 to $147,414 per year.

The proposed salary basis threshold represents the 90th percentile of full-time salaried workers nationally, as projected by the DOL for 2020. This was the same methodology used by the DOL for the Obama-era rule.

3. The duties tests for executive, administrative and professional employees remain unchanged.

Assuming an employer has properly classified its exempt employees, the NPRM will not change that classification, unless the employee no longer satisfies the salary basis threshold.

Given how the Obama-era rule met its demise, the NPRM is unlikely to be the final word. Stay tuned for additional developments.

This post was written by Rufino Gaytán of Godfrey & Kahn S.C.

Compliance with the New Proposed DOL Salary Threshold May Create Challenges for Many Employers

As we wrote in this space just last week, the U.S. Department of Labor (“DOL”) has proposed a new salary threshold for most “white collar” exemptions. The new rule would increase the minimum salary to $35,308 per year ($679 per week) – nearly the exact midpoint between the longtime $23,600 salary threshold and the $47,476 threshold that had been proposed by the Obama Administration. The threshold for “highly compensated” employees would also increase — from $100,000 to $147,414 per year.

Should the proposed rule go into effect – and there is every reason to believe it will – it would be effective on January 1, 2020. That gives employers plenty of time to consider their options and make necessary changes.

On first glance, dealing with the increase in the minimum salaries for white-collar exemptions would not appear to create much of a challenge for employers—they must decide whether to increase employees’ salaries or convert them to non-exempt status. Many employers that reviewed the issue and its repercussions back in 2016, when it was expected that the Obama Administration’s rules would go into effect, would likely disagree with the assessment that this is a simple task. The decisions not only impact the affected employees, but they also affect the employers’ budgets and compensation structures, potentially creating unwanted salary compressions or forcing employers to adjust the salaries of other employees.

In addition, converting employees to non-exempt status requires an employer to set new hourly rates for the employees. If that is not done carefully, it could result in employees receiving unanticipated increases in compensation—perhaps huge ones— or unexpected decreases in annual compensation.

The Impact on Compensation Structures

For otherwise exempt employees whose compensation already satisfies the new minimum salaries, nothing would need be done to comply with the new DOL rule. But that does not mean that those employees will not be affected by the new rule. Employers that raise the salaries of other employees to comply with the new thresholds could create operational or morale issues for those whose salaries are not being adjusted. It is not difficult to conceive of situations where complying with the rule by only addressing the compensation of those who fall below the threshold would result in a lower-level employee leapfrogging over a higher-level employee in terms of compensation, or where it results in unwanted salary compression.

Salary shifts could also affect any analysis of whether the new compensation structure adversely affects individuals in protected categories. A female senior manager who is now being paid only several hundred dollars per year more than the lower-level male manager might well raise a concern about gender discrimination if her salary is not also adjusted.

The Impact of Increasing Salaries

For otherwise exempt employees who currently do not earn enough to satisfy the new minimum salary thresholds, employers would have two choices: increase the salary to satisfy the new threshold or convert the employee to non-exempt status. Converting employees to non-exempt status can create challenges in attempting to set their hourly rates (addressed separately below).

If, for example, an otherwise exempt employee currently earns a salary of $35,000 per year, the employer may have an easy decision to give the employee a raise of at least $308 to satisfy the new threshold. But many decisions would not be so simple, particularly once they are viewed outside of a vacuum. What about the employee who is earning $30,000 per year? Should that employee be given a raise of more than $5,000 or should she be converted to non-exempt status? It is not difficult to see how one employer would choose to give an employee a $5,000 raise while another would choose to convert that employee to non-exempt status.

What if the amount of an increase seems small, but it would have a large impact because of the number of employees affected? A salary increase of $5,000 for a single employee to meet the new salary threshold may not have a substantial impact upon many employers. But what if the employer would need to give that $5,000 increase to 500 employees across the country to maintain their exempt status? Suddenly, maintaining the exemption would carry a $2,500,000 price tag. And that is not a one-time cost; it is an annual one that would likely increase as those employees received subsequent raises.

The Impact of Reclassifying an Employee as Non-Exempt

If an employer decides to convert an employee to non-exempt status, it faces a new challenge—setting the employee’s hourly rate. Doing that requires much more thought than punching numbers into a calculator.

If the employer “reverse engineers” an hourly rate by just taking the employee’s salary and assuming the employee works 52 weeks a year and 40 hours each week, it will result in the employee earning the same amount as before so long as she does not work any overtime at all during the year. The employee will earn more than she did previously if she works any overtime at all. And if she works a significant amount of overtime, the reclassification to non-exempt status could result in the employee earning significantly more than she earned before as an exempt employee. If she worked 10 hours of overtime a week, she would effectively receive a 37 percent increase in compensation. And, depending on the hourly rate and the number of overtime hours she actually works, she could end up making more as a non-exempt employee than the $35,308 exemption threshold.

But calculating the employee’s new hourly rate based on an expectation that she will work more overtime than is realistic would result in the employee earning less than she did before. If, for instance, the employer calculated an hourly rate by assuming that the employee would work 10 hours of overtime each week, and if she worked less than that, she would earn less than she did before—perhaps significantly less. That, of course, could lead to a severe morale issue—or to the unwanted departure of a valued employee.

This post was written by Michael S. Kun of Epstein Becker & Green, P.C.

DOL’s Long-Awaited Overtime Proposed Rule Announced

Recent developments on the wage and hour front will soon require employers to reexamine exemption classifications within their workforce.

On March 7, 2019, the U.S. Department of Labor (“DOL”) released its long-awaited proposed amended rule to the overtime provisions of the Fair Labor Standards Act (“FLSA”). If this proposed rule takes effect, the minimum salary threshold required for workers to qualify for the FLSA’s “white collar” exemptions (executive, administrative and professional) will be increased to $35,308 annually (or $679 per week). The current salary threshold under the FLSA’s “white collar” exemptions is $455 per week ($23,660 annually), and has not seen an increase since 2004.

The proposed rule also will increase the salary threshold for the “highly compensated employee” exemption, from the current $100,000 to $147,414 per year. Further, under the proposed rule, employers will be allowed to count certain nondiscretionary bonuses and incentive payments (including commissions) toward up to 10 percent of the new salary threshold.

By way of background, in May 2016, the DOL under President Obama issued a rule intended to increase the salary threshold to $913 per week ($47,476 annually). Other changes to the rule included an increased salary threshold for highly compensated workers from $100,000 to approximately $134,000 and a schedule for automatic increases to the salary threshold.

Days before the rule was set to take effect, a Texas federal district court preliminarily enjoined the rule, and later confirmed its ruling on the basis that the new regulations placed too much emphasis on the salary requirement and would have resulted in the reclassification of substantial groups of employees who otherwise performed duties qualifying for exempt status. At the time, the DOL predicted that its rule would cover about four million workers who were presently non-exempt.

While the DOL’s newly proposed rule is set to take effect in January 2020, it is subject to a 60-day comment period and may face legal challenges from business and worker advocate groups alike. Given that some increase to the salary threshold is imminent, employers should nevertheless remain proactive and audit their exempt worker population. As we have noted in prior publications, employers have a number of options available in addressing this issue. As a first step, employers should identify all positions in their organizations that are classified as exempt but pay less than $35,308, review employees’ job descriptions for compliance under each exemption’s duties test, and determine the number of hours exempt employees are working.

This post was written by Sadina Montani and Monique E. Chase of Vedder Price.

Read more labor and employment news, including updates on the DOL’s Overtime Rule, on our labor and employment page.

U.S. Department of Labor Rescinds Guidance Regarding “Side Work” and the FLSA’s Tip Credit in Restaurants

Under the Fair Labor Standards Act (“FLSA”), employers can satisfy their minimum wage obligations to tipped employees by paying them a tipped wage of as low as $2.13 per hour, so long as the employees earn enough in tips to make up the difference between the tipped wage and the full minimum wage. (Other conditions apply that are not important here.) Back in 1988, the U.S. Department of Labor’s Wage and Hour Division amended its Field Operations Handbook, the agency’s internal guidance manual for investigators, to include a new requirement the agency sought to apply to restaurants. Under that then-new guidance, when tipped employees spend more than 20% of their working time on tasks that do not specifically generate tips—tasks such as wiping down tables, filling salt and pepper shakers, and rolling silverware into napkins, duties generally referred to in the industry as “side work”—the employer must pay full minimum wage, rather than the lesser tipped wage, for the side work.

This provision of the Handbook flew largely under the radar for years. This was partly because the Department did not publicize the contents of the Handbook, and party because the Department did not bring enforcement actions premised on a violation of this 20% standard. And historically, virtually nobody in the restaurant industry maintained records specifically segregating hours and minutes spent on tip-generating tasks as compared to side work.

In 2007, a federal district court in Missouri issued a ruling in a class action upholding the validity of the 20% standard, and that decision received an enormous amount of attention and publicity. In the years that followed, a wave of class actions against restaurants flooded the courts across the country, all contending that the restaurants owe the tipped employees extra money because of the Department’s 20% standard in the Handbook.

In January of 2009, in the waning days of the George W. Bush Administration, the Department issued an opinion letter rejecting the 20% standard, superseding the Handbook provision, and stating that there is no limit on the amount of time a tipped employee can spend on side work. Six weeks later, however, in March of 2009, the Obama Administration withdrew that opinion letter. In subsequent years, the Department filed several amicus curiae briefs in pending court cases endorsing the 20% standard, and the Department even modified the Handbook provision to make the requirements even more difficult for employers to satisfy.

In late 2017, a divided three-judge panel of the U.S. Court of Appeals for the Ninth Circuit concluded, in nine consolidated appeals presenting the same issue, that the Department’s 20% standard is not consistent with the FLSA and thus was unlawful. A few months later, however, a divided 11-judge en banc panel of the same court reached the opposite conclusion, ruling by an 8-3 vote that the 20% standard is worthy of deference.

In July of 2018, the Restaurant Law Center, represented by Epstein Becker Green, filed a declaratory judgment action against the Department in federal court in Texas challenging the validity of the 20% standard under the FLSA, the Administrative Procedure Act, and the U.S. Constitution. Roughly a month before the employers’ deadline to file a certiorari petition with the Supreme Court regarding the en banc Ninth Circuit ruling, and just days before the government’s response is due in the Texas litigation, the Department reissued the 2009 opinion letter.

This opinion letter, now designated as FLSA2018-27, once again rejects the 20% standard and clarifies that employers may pay a tipped wage when employees engage in side work so long as the side work occurs contemporaneously with, or in close proximity to, the employees’ normal tip-generating activity. This opinion letter should put an end to the many pending cases, including numerous class actions, that depend on the 20% standard.

The overall take-away for employers is that at least under federal law, side work performed during an employee’s shift, in between tip-generating tasks, should present no concern. The same should be true of side work performed at the start or end of an employee’s shift, so long as the side work does not take too long. An employee coming in fifteen or thirty minutes before the restaurant is open to help get the restaurant ready for the day, followed by the remainder of the shift in which the employee generates tips, seems to be consistent with the new opinion letter. Likewise for employees who spend some time at the end of the shift helping to close the restaurant for the day. But employers should use common sense and good judgment, as having tipped employees spend hours and hours performing side work may still give rise to risks. And it remains important to be aware of any state or local law requirements that may differ from federal law.

This post was written by Paul DeCamp of Epstein Becker & Green, P.C.

New Federal Overtime Rule Expected in Early 2019

It doesn’t seem that long ago that employers were busily preparing for the new overtime rule that would have doubled the minimum salary level for the “white collar” exemptions from $23,660 to nearly $48,000. That new rule—finalized in May 2016 and set to take effect on December 1 of that year—was struck down by a Texas federal court in late November 2016.

President Trump took office in January 2017, and the DOL—with less interest in so aggressively raising wages as the predecessor administration—pushed the pause button on revisions to the overtime rule. In public comments, however, Labor Secretary Alexander Acosta, who assumed the post in late April 2017, repeatedly indicated that he favors some increase in the minimum salary threshold for exemption, which was last raised in 2004 (and before that, in 1975).

In July 2017, the DOL began seeing public comment on a revised overtime rule, publishing a Request for Information in the Federal Register. The comment period closed in September 2017.

In its Spring 2018 Regulatory Agenda, the Trump Administration formally announced its intention to issue a Notice of Proposed Rulemaking (NPRM) in January 2019 “to determine what the salary level for exemption of executive, administrative, and professional employees should be.”

So what should employers expect in a new overtime rule? Likely an increase in the minimum salary for exemption to something in the low-to-mid $30,000s. This would be consistent with Secretary Acosta’s comments on the issue, but still considerably lower than the level proposed by the Obama Administration. It would also be significant lower than some state law minimum salaries for exemption (consider New York’s minimum for exempt executive and administrative employees, which will climb to $58,500 at the end of 2018).

Another thing we could see in a new overtime rule are more modern examples of how the various exemptions might apply in today’s workplaces. The DOL included a number of new examples in its sweeping revisions to the overtime exemption rules in 2004. It would make sense to revisit those examples, and to consider additional examples, given how the workplace has evolved in the last 15 years.

It’s also possible the DOL will depart from a one-size-fits-all salary minimum and propose different tests for smaller or non-profit employers. Small businesses, non-profits, and educational institutions were among the loudest voices in opposition to the 2016 overtime rule changes, and would be among the hardest hit by any increase in the minimum salary levels.

What I don’t expect from a new overtime rule are automatic future increases (which were part of the 2016 rule) or a change from a qualitative to a quantitative (e.g., California-style) primary duties test.

I also don’t expect any new overtime rule to take effect before 2020. Even assuming the DOL meets its expected deadline of proposing a new rule in January 2019, it will likely receive (and have to review) hundreds of thousands of public comments. (The DOL received more than 270,000 comments in response to the proposed overtime rule that was finalized in 2016.) In all likelihood, the DOL will give employers plenty of lead time to plan and prepare for any increases in the minimum salary for exemption. So for employers who are not subject to more stringent state rules around exemption, it’s likely you have at least a year and a few months before you’d have to implement any changes.

This post was written by Allan Bloom of Proskauer Rose LLP

Learn more labor and employment news on the National Law Reviews Labor & Employment page.

New Legislative Action on “Tip Pooling”

Congress and the President have waded into the ongoing debate regarding employers’ use of “tip pools” under the Fair Labor Standards Act (“FLSA”) by passing the Tip Income Protection Act (“TIPA”) as part of the omnibus spending bill.

The FLSA permits an employer to take a partial credit against its minimum wage obligations based on employee tips if the employee retains all of his or her tips, or they are made part of a tip pool shared only with employees who “customarily and regularly receive tips.” See 29 U.S.C. § 203(m). Thus, an employer utilizing a tip credit to comply with minimum wage obligations cannot establish a tip pool that includes non-tipped employees (e.g., back-of-the-house restaurant employees). The FLSA left the allocation of tips unregulated where an employer did not use tip credits.

In 2011, the Department of Labor (“DOL”) issued a regulation applying the limitation on the use of tip pools to cases where the employer did nottake a tip credit and paid employees the full federal minimum wage. See 29 C.F.R. § 531.52. A number of federal courts concluded that the regulation was inconsistent with the text of the FLSA. See, e.g., Marlow v. New Food Guy, Inc., 861 F.3d 1157, 1163-64 (10th Cir. 2017) (2011 DOL regulation was inconsistent with the FLSA, which did not authorize the agency to “regulate the ownership of tips when the employer is not taking the tip credit”). However, the Ninth Circuit disagreed, reasoning that because the FLSA is “silent as to the tip pooling practices of employers who do not take a tip credit” it should defer to the DOL. Oregon Rest. and Lodging Ass’n v. Perez, 816 F.3d 1080, 1090 (9th Cir. 2016).

In 2017, the DOL announced proposed rulemaking to rescind the 2011 regulation. See here and here. After much deliberation regarding the proposed agency action, Congress enacted TIPA, which states, in relevant part:

“An employer may not keep tips received by its employees for any purposes, including allowing managers or supervisors to keep any portion of employees’ tips, regardless of whether or not the employer takes a tip credit.”

TIPA also provides that the 2011 regulation shall have “no force of effect.” An employer that violates TIPA may be liable for any tip credit taken, the amount of the withheld tips, liquidated damages, and $1,100 civil penalty for each violation.

Stated simply, TIPA limits the permissible use of tip pooling for all employers irrespective of whether an employer takes advantage of a tip credit or whether its employees’ regular hourly rate exceeds the minimum wage. However, TIPA’s language raises a number of interpretive questions, such as:

What does it mean for an employer to “keep tips” received by employees? The law very likely prohibits an employer from diverting tips directly to its own coffers. But does an employer “keep tips” by implementing a standard tip pool that does not include “managers or supervisors?”
TIPA does not define a manager or supervisor. Assuming TIPA permits standard tip pools, does an employer violate the law if the pool includes modestly-paid hourly employees with minimal management responsibilities and limited or no ability to discipline employees (e.g., shift leads)?

These are a few of the questions employers with tipped employees will confront in the coming months and years as we await additional guidance from the courts and the DOL. Employers in the restaurant and other industries should closely analyze how they distribute employee tips to ensure compliance with TIPA.

This post was written by James C. Sullivan and Brian K. Morris of Polsinelli PC, Polsinelli LLP in California.

For more on Employment Legislation, Check out the National Law Review’s Employment Law Page.

Court Approves $342,500 Settlement On Behalf of 82 Tipped Food Service Workers

In Surdu v. Madison Global, LLC, the Court approved a $342,500 settlement on behalf of approximately 82 current and former employees of Nello Restaurant, who had worked as servers, bussers, runners and bartenders. See No. 15-CIV-6567 (HBP) (S.D.N.Y. Sept. 1, 2017). The plaintiffs alleged violations of the FLSA and NYLL arising from allegedly unpaid minimum wages, misappropriated gratuities, uniform purchase and maintenance costs, and inaccurate wage statements.

After conditionally certifying a Rule 23 class for purposes of settlement, the Court addressed the “Grinnell” factors to assess whether the settlement was substantively fair, reasonable and adequate. Thus, the Court considered: (1) the complexity, expense and likely duration of the litigation; (2) the reaction of the class to the settlement; (3) the stage of the proceedings and the amount of discovery completed; (4) the risks of establishing liability; (5) the risks of establishing damages; (6) the risks of maintaining the class action through the trial; (7) the ability of the defendants to withstand a greater judgment; (8) the range of reasonableness of the settlement fund in light of the best possible recovery; (9) the range of reasonableness of the settlement fund to a possible recovery in light of all the attendant risks of litigation.

The Court found each of these factors satisfied. Of note, the Court found that it was reasonable for the class members to receive approximately 50% of their claimed misappropriated tips after service awards, attorneys’ fees, and costs were deduced from the gross settlement amount. The Court also found service awards in the amount $8,500 for each Named Plaintiff and attorneys’ fees in the amount of $114,166.66 to be reasonable.

For more Labor & Employment legal analysis go to The National Law Review

FLSA Overtime Rules Enjoined, NY Overtime Laws, National Origin Discrimination: Employment Law This Week [VIDEO]

District Court Enjoins FLSA Overtime Rules

Our top story: A federal court in Texas has temporarily enjoined new exemption rules issued by the U.S. Department of Labor (DOL). The rules, which would have dramatically increased salary thresholds for overtime exemptions, were set to go into effect on December 1. The district court judge found that the 21 states that brought the suit established a prima facie case that the DOL overstepped its authority in establishing the new rules. Because the Fair Labor Standards Act makes no reference to salary thresholds, the court found that any new thresholds might have to be created by Congress and not the DOL. If the injunction is made permanent, it could be the beginning of a lengthy appeals process, which would leave employers in limbo.

New York State Overtime Laws Likely to Proceed

While overtime expansion is stalled at the federal level, New York State’s plan to increase salary thresholds remains on track. The comment period for the proposed increase closed on December 3. Under the rule, thresholds for exempt employees would rise to $825.00 per week for large employers in New York City and $787.50 per week for employers in Nassau, Suffolk, and Westchester Counties. If the New York State Department of Labor proceeds with the new rule, it will go into effect on December 31 of this year.

EEOC Issues Updated Guidelines on National Origin Discrimination

The Equal Employment Opportunity Commission (EEOC) released updated guidance on national origin discrimination. The new guidelines address legal developments on issues like human trafficking and harassment in the workplace. The guidance includes over 30 examples of national origin discrimination, as well as best practices to reduce the risk of violation. The guidance also states that, if an employee’s accent “materially interferes” with his or her ability to communicate in spoken English and effective spoken communication in English is a job requirement, an employer can legally move that worker.

USCIS Increases Stability for Foreign Workers

The U.S. Citizenship and Immigration Services (USCIS) has issued a final rule that makes it easier for employers to sponsor and retain skilled foreign workers. The rule gives added job flexibility and protection to foreign workers in H-1B status or who are stuck in a long green card application process. USCIS’s rule also expands the eligibility of certain employers for H-1B cap exemptions and adds grace periods, so certain skilled workers can remain in the country for limited periods while in between jobs.

Tip of the Week

Last week, as part of the 21st Century Cures Act, the U.S. House of Representatives passed new mental health reform legislation intended to step up enforcement of rules requiring that insurers cover mental health care at the same level as they cover physical health care. The legislation could impact employers’ health insurance plans. For this week’s Tip of the Week, James Gelfand, Senior Vice President of Health Policy for The ERISA Industry Committee (ERIC), has some advice on how employers should update their plans in 2017 in order to remain compliant:

BY George Carroll Whipple, III of Epstein Becker & Green, P.C.

Adjusting Wage Rates? Be Mindful of State Notice Requirements

Even employers who were opposed to the new overtime regulations are in a quandary after the District Court for the Eastern District of Texas enjoined the Department of Labor from implementing new salary thresholds for the FLSA’s “white collar” exemptions.

Will the injunction become permanent? Will it be upheld by the Fifth Circuit?

Will the Department of Labor continue to defend the case when the Trump Administration is in place?

What does the rationale behind the District Court’s injunction (that the language of the FLSA suggests exempt status should be determined based only on an employee’s duties) mean for the $455-per-week salary threshold in the “old” regulations?

Whether employers can reverse salary increases that already have been implemented or announced is an issue that should be approached carefully.

For example, employers should be aware that state law may specify the amount of notice that an employer must provide to an employee before changing his or her pay.

In most states, employers merely need to give employees notice of a change in pay before the beginning of the pay period in which the new wage rate comes into effect.

But some states require impose additional requirements. The New York Department of Labor, for example, explains that if the information in an employee’s wage statement changes, “the employer must tell employees at least a week before it happens unless they issue a new paystub that carries the notice. The employer must notify an employee in writing before they reduce the employee’s wage rate. Employers in the hospitality industry must give notice every time a wage rate changes.”

Maryland (and Iowa) requires notice at least one pay period in advance. Alaska, Maine, Missouri, North Carolina, Nevada and South Carolina have their own notice requirements.

Employers who are making changes to wage rates based on the status of the DOL’s regulations should be nimble – while also making sure that they are providing the notice required under state law.

ARTICLE BY Michael D. Thompson of Epstein Becker & Green, P.C.

Tag: FLSA